Come and Get It: ESI Illuminations Support Team Overview

Advisors using the ESI Illuminations Platform have an entire team of resources to help with everything from pre-sale to account operations. And we have all that info on one handy flyer to make your “who do I call?” questions easier:

Where can you find this PDF? On Illuminations of course! To access, simply log into ESI Illuminations and click on your “Platform” tab. From there, select “Training and Reference” in your side menu, and our new flyer is waiting for you:

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Check out These Docupace Tips!

We can’t help but notice a few things that may be adding time and frustration to your paperwork submission process, so we wanted to share a few Docupace reminders to help things run more smoothly. These topics are some of the top reasons we receive calls or emails from the field. While we always love talking to you, the tips below can save you time and frustration.

eSignature – Merged Signers

Forms are tagged behind the scenes with different signer types (owner, trustee, authorized person, etc.).  When opening accounts like Trusts or Qualified Plans, the authorized signer(s) information is placed on to several forms. If a work item has more than one signer type on these forms, the system will merge the signing ceremonies into one. There will be multiple lines on the eSign transaction screen for the client (see example below), however if the name, email, and phone numbers are identical the signing will be merged. It is important to remember that lines should not be removed from the eSign transaction screen. If they are, it will cause the forms with that particular signer type to not be tagged for eSignature, resulting in the need to go back to the client.

Adding Documents to Work Items out for eSignature

After a work item is sent out for eSignature, it stays in a ‘Client Signature Pending – eSign’ queue until all signers have completed their ceremony. During the time the work item is in this queue, no action should be taken, including adding documents to that work item. Any update to the work item will cause auto-escalation out of that queue and move the work item to the next queue in the workflow before the signing ceremonies are complete. If there is a need to upload a document into a work item, it is best to do that before sending out for eSignature. If you realize you must upload a document after you’ve sent the item for eSignature, wait until all signing ceremonies are complete, then access the work item via Retrieve to upload that document.

eSignature Envelopes – Order of emails

When sending out paperwork to multiple clients for eSignature, the email is sent first to the primary signer. Once they complete the signing, the secondary signer receives an email to complete their signing ceremony. The clients will not receive the emails at the same time. Once all clients have completed their ceremonies paperwork will be emailed to the rep for their signature.

Recalling Work Items that have been sent out for eSignature

If you ever need to update an eSign transaction (email address or phone for authentication) or form within it, the process only takes a minute, and the guide to help can be found here.

Vendor Form Requirements

When creating a new account, the bundles/kits within Docupace are set up to include the required ESI forms along with the appropriate vendor application. In many instances, you may need additional vendor forms beyond the application. We have set up Optional forms with these bundles that can be added them to the work item with one easy click. If you need additional forms outside of the Optional Forms set, you can access the Docupace forms library to add to your work item. A walkthrough of that process can be found here.

If you have any questions on these or any other Docupace related items, call 800-344-7437, option 1, option 4, or email DocupaceSupport@nationallife.com.

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We’ve Got Our Eyes Set on ESI Elite Symposium 2023

Congratulations again to everyone who qualified for the ESI Elite Symposium being held in Park City, Utah this June! If you didn’t qualify in 2021 for the conference in Utah, make qualifying for the ESI Elite Symposium one of your goals in 2022.

Need some inspiration? The ESI Elite Symposium is a chance to:

  • Network with other top producers
  • Hear best practices for prospecting and practice management
  • Pick up new sales and marketing ideas

And though we haven’t announced the location in 2023 yet, with previous destinations like the Biltmore Estate in Ashville, NC, the Viking Resort in Newport, RI, and the Ritz Carlton New Orleans, the only question is, “Are you on track to qualify?”.

How to Qualify in 2022

Rep Qualifications: $425,000* in GDC

Agency Qualifications: $4,250,000* in GDC

Qualification Period: 1/1/2022-12/31/2022

*Credits may be adjusted if needed to comply with the Massachusetts Fiduciary Rule. Annuity Sales are excluded from this amount.

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7 Charts on the Big CPI Rise, Fed Rate Hike Outlook

“Inflation pressures remained stubbornly high in January, keeping hopes for a peak in the upward pressure on prices on hold for now and setting the Federal Reserve up for an aggressive first interest rate increase in March.

The Bureau of Labor Statistics reported the consumer price index was up a stronger-than-predicted 0.6% in January from December and rose an above-expectations 7.5% from 12 months ago. Thanks to big year-over-year increases in energy, used cars and food, the CPI posted its largest 12-month increase in 40-years.”

Click here for the full article.

 

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ESI on the New Agent Website Portal

New Agent Portal – Home Page
You’ll find multiple shortcuts to all your business processing technology (Docupace, Wealthscape, etc.) and more on the Home page. Click on either the lightening bolt in the upper right corner or the “View all Business Tools” to view all shortcuts. Want to just see your ESI shortcuts? Click on Tools and choose “ESI Business Tools”.

Sales and Marketing Tab
Click on the Sales and Marketing tab for all related resources. If you want to see ESI-specific marketing materials and campaigns, choose the “Investments” option under Sales and Marketing.

Compensation Tab
To find ESI specific compensation and incentives info – including leaderboards – click on the Compensation tab and use the left navigation.

Products Tab
Click on the Products tab to view both ESI Strategic Partner information as well as overall ESI product information.

Training Tab
You’ll find multiple ESI resources under the Training tab, including Compliance materials, the DOL Training page, Doing Business with ESI resources and product training materials.

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Slippery Conditions Ahead for Fixed Income

“Bond yields rose in January to start the year off in similar fashion to 2020. A year ago, the bond market was reacting to the imminent rollout of vaccines which seemed to offer hope for an end to the pandemic. This year, even as the pandemic continues to rage, the bond market is contending with a pivot in Fed policy. By the end of March, monthly purchases of Treasuries and MBS will end, the first rate hike is expected to occur, and the beginning of balance sheet runoff will likely be a matter of months away. While much of this has been communicated through various means, the tone has turned more hawkish (translation: aggressive) than previously assumed by many market participants, sending yields higher (45 basis points higher on the two-year Treasury, 27 on the ten-year). As a result of all this, total return performance for the month as represented by the Bloomberg U.S. Intermediate Aggregate Index was -1.25%. Even the Bloomberg Municipal Bond Index had a tough month with a total return of -2.74%. “

Click here to read the whole commentary.

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Important Reminder Regarding Education and Recommendations

In a previous communication, What Does It Mean To Be A Fiduciary?, under the latest change in the Department of Labor’s (DOL) interpretation of the Employment Retirement Income Security Act of 1974 (ERISA), you are a fiduciary when you provide investment advice to retirement investors and meet a 5-part test.[1]  The DOL’S latest Prohibited Transaction Exemption (PTE 2020-02[2], or “Rule”), which ESI began using on December 20, 2021, allows you to receive third-party compensation, such as commissions, when you make rollover recommendations to a retirement investor.  However, if you only provide the investor with education without making a recommendation, then you have not become a fiduciary, ERISA’s regulations do not apply, and using 2020-02 for a rollover transaction is not required.

Important Clarification: If you only educate a client about their options and they decide to do an IRA rollover, a subsequent product recommendation by you does not mean that you were a fiduciary when the rollover occurred.

So, it’s important to understand the line between what constitutes education and what constitutes a recommendation.  This communication attempts to provides examples of both, so that you can decide which path works best for you and your customers.

Education vs Recommendation
When considering the potential need for an investor to roll assets from one retirement account to another, you may provide general information to your client without making a rollover recommendation.  For example, education can include any of the following:

  • A discussion of the general characteristics of employer-sponsored plans and IRAs, which could include:
    • Expenses associated with each
    • Available investment options associated with each
    • Tax implications of each
  • A discussion of the rollover options available under the existing plan.  For example:
    • Pros and cons of leaving the assets in the current plan
    • General discussion of available product types
  • A discussion about historic differences in returns between asset categories
  • The effects of inflation over time
  • Estimates of income needs at retirement, and
  • General investment concepts, including dollar cost averaging, modern portfolio theory, and asset allocation.
  • A discussion explaining your professional experience and qualifications.  

To stay within the realm of education, the information you provide to the retirement investor may not include a “call to action”.  A “call to action” would be an explicit or implicit recommendation that the investor take some action.  For example:

  • “I recommend you roll this account into an IRA” – clearly a recommendation.
  • “If it was my decision, I’d move these assets from the employer” – this is driving the investor to take action and, therefore, a recommendation.
  • “I think you should…” – also a call to action.

Generally, referring to a specific product would ordinarily be done if or when a recommendation is made.  Therefore, educating an investor on expenses should not include a specific product as an illustration.  For example:

“Take XYZ fund, for example.  Its expense ratio is…and compare that to your existing plan….”.

Rather, a best practice for providing education could be to avoid naming a particular company or product in the course of discussion, even if presented for comparison purposes.  Keeping the discussion at the product-type level (for example, comparing the structure of mutual funds vs annuities, generally) precludes possibly leading the investor toward a particular product or vendor, and keeps the conversation informational.

When comparing the expenses of available product types, explaining the differences in general terms remains educational and provides the investor a general sense of the differences between products:

“Expense ratios for mutual funds are typically around X%, versus those of variable annuities, which are generally around Y%…”

Submitting Business – Rollover Education Forms
While the DOL’s non-enforcement policy extends until June 30, 2022 for many of these new requirements, ESI currently requires you to complete the PTE 84-24 disclosure form, referred to as the ‘Qualified Annuity Disclosure Form,’ when a customer purchases an annuity with qualified funds.

For any business other than annuities[3], if only education is provided, you will only need to provide the Defined Contribution Rollover Education (ES0661) or Defined Benefit Rollover Education (ES0715) (collectively, “Education Form”), as applicable. These rollover education forms discuss the benefits and shortcomings of staying in the existing plan, doing an IRA Rollover, moving to a new plan, or taking a distribution.  Electing one of these four options impacts the cost of the investments, as well as tax implications and the level of services available to the client. 

There may be instances in which you provide education about rollover options to the investor, and they decide to move forward with a rollover transaction; which only later results in a product recommendation to support the rollover.  In this scenario, you should complete the appropriate Education Form. This is because, in this scenario, the product recommendation came after the client made the decision to rollover the assets, subsequent to having first been educated on their options.
 
Challenges with Submitted Business
Processing your business as timely and efficiently as possible is in everyone’s interest: the client’s, yours, and ESI’s.  Keep in mind that some of the issues that could delay rollover business, specifically, include:

  • Failing to complete an education form (ES0661 or ES0715) when business is submitted
  • Recommending a rollover from a 401(k) plan without having obtained the required Form 404(a)(5), which describes the fees of the Plan, and without providing the needed analysis comparing the differences in costs and services between the plan and the recommended product.
  • Failure to provide a rationale that sufficiently justifies a recommendation to rollover assets.

If you have questions about forms or other required documentation, you can reach out to ESI’s Suitability Review Principals for guidance.


[1]Under ERISA, you are a fiduciary if: 1) you provide advice or recommendations regarding purchasing or selling securities or other property of the plan for a fee; 2) you do so on a regular basis; 3) your advice is given pursuant to a mutual agreement or understanding; 4) the investment advice serves as a primary basis for the investment decision; and 5) the advice is individualized.

[2] Prohibited Transaction Exemption (PTE) 2020-02 permits a fiduciary to receive third-party compensation pursuant to meeting specified requirements in the PTE.  See “What Does It Mean To Be A Fiduciary?” for a more detailed discussion of the PTE.

[3] It should be noted that all Reg BI requirements related to rollover recommendations remain, independent of DOL regulations.

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January 2022 is in The Books – Thank Goodness

While 2021 was an excellent year for the equities markets— the S&P 500 index returned an eye-popping 26.9%– 2022 is off to a rocky start. 

Despite a strong two-day rally to close the month, the S&P 500 index finished down 5.3%. The broad S&P 500 Index performed better than the tech-heavy NASDAQ, down 9%, and the major growth asset classes; (US Large Cap Growth: -12.91%, U.S. Mid Cap Growth: -14.61%, and the US Small Cap Growth:    -14.37%).

Why the Abrupt Reversal from 2021?

Challenges with inflation and supply chain shortages persist. The Federal Reserve has signaled the potential for interest rate increases, and possible Russian aggression in Ukraine has drawn the world’s attention.

With these headwinds and geopolitical events, is it surprising that the markets have become more volatile and turned down? Perhaps not.

But what has not changed in the last 2 months, for many clients, is their long-term financial plan. 

January saw the markets whipsawed. On January 24, widespread selling sent the market down 4% before it roared back to end the day with a slight gain. Are 4% daily moves in the market common? No. Are they alarming? Absolutely.

No one enjoys watching the values in their accounts decline, and it’s hard to keep a long-term mindset amid current extreme market volatility. How can we reassure clients and keep them focused on their long-term financial goals?

It starts with open lines of communication.

“This is crazy. When does it end?” 

I was confronted with this statement and rhetorical question during a recent conversation about the markets on January 27, 2022. 

Based on the question, there seemed to be an expectation that I would have some insightful prediction of what would happen next in the market. I did not. Instead, I shared that a major economic indicator, overall growth, is positive.

“Were you aware that the U.S. economy grew at 5.7% in 2021, the fastest since 1984?”[1] I asked.

I then asked what had fundamentally changed with his investment plan – other than the short-term unrealized losses – in the past month? I acknowledged his concern, shared a positive, and redirected him to focus on his long-term plan.

Strategies with a Focus on Long-Term Goals

What are other strategies to help clients focus on their long-term goals during volatile markets?

  1. Provide historical perspective. Market volatility can be concentrated. From January 1, 2020 – June 7, 2020, there were 35 daily gains or losses of 3% or more. In the previous 5 years, there were 11 daily moves of 3% or more.[2] 
  2. Re-engage with the asset manager. Does the client understand the asset manager’s strategy in the current market environment? Would it help to have a refresher?
  3. Diversification. Asset classes rotate as they fall in and out of favor. Are the client’s assets well-diversified?
  4. Market timing rarely works. Why? History suggests that the market movement is essentially unpredictable. History provides a crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.” Shelby M.C. Davis
  5. Dollar-Cost Averaging, DCA. While DCA is not a guarantee of investing success, it avoids trying to time the market, could minimize investor regret if the market declines after investing a lump sum, and could be a call to action for some by not committing to investing all at once.

Get Help

Do your clients want to check in during periods of market volatility? What is their preferred engagement – phone call, email, or a social post?  ESI Marketing has a variety of materials that address market volatility and will help to foster client engagement.  Please see the below links for additional information.  ESI Investment Marketing, Guide to Market Fluctuations, Fidelity and Envestnet brochure links.   

If you would like to discuss registered rep or client resources, please contact ESI Business Development, 800-344-7437.

Dan Randall, CFP®, CLU, ChFC
Vice President – Product Management, Equity Services Inc

References:

1 Washington Post, 1/27/22

2 A Wealth of Common Sense; The 2020 Stock Market by the Numbers, 6/7/2020


[1] Washington Post, 1/27/22

[2] A Wealth of Common Sense; The 2020 Stock Market by the Numbers, 6/7/2020

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